Did you know that through the Pennsylvania Educational Improvement Tax Credit (PA EITC) and the Pennsylvania Opportunity Scholarship Tax Credit (PA OSTC), business entities in the Commonwealth of Pennsylvania can earn a tax credit for up to 90% of certain Pennsylvania taxes when they make a donation supporting academic scholarships through 501(c)3 tax-exempt organizations, such as Continental FC?

Funds received by Continental under the EITC and OSTC programs provide direct support to Continental athletes for need-based tuition assistance at private schools in Pennsylvania. Please consider making academic scholarship support available for Continental’s young athletes through these powerful programs. EITC and OSTC gifts are made to Continental’s legacy 501(c)3 entity, which is Spirit Soccer Club of Chester County, Inc.

How do the EITC and OSTC programs work?

In effect, it costs just six cents to give a dollar.

Tax credits are available through the Pennsylvania Department of Community & Economic Development on a first-come, first-serve basis for contributions to EITC and OSTC-approved approved scholarship organizations, such as Continental, which provides academic scholarship support for Continental athletes from lower income families to attend private schools.

The tax credits may be applied against the Pennsylvania state income tax liability of a business for the tax year in which the contribution was made and the tax credits may also be used to offset personal taxable income for owners of flow-through business entities which are not taxable, such as S Corporations, LLC’s, etc.

A business that agrees to make a one-year EITC and/or OSTC contribution to Continental may receive a tax credit equal to 75% of its contribution, up to a maximum of $750,000 per taxable year.

A business that agrees to make a two-year EITC and/or OSTC contribution to Continental may receive a tax credit equal to 90% of its contribution.

For a donor in the maximum tax bracket, the after-tax cost of the EITC and OSTC gifts can be as little as six cents on the dollar. See illustration:

Illustration

Estimated After-tax Cost of Contribution

Federal Tax Rate

39.60%

PA State Income Tax Rate

3.07%

PA State Tax Credit*

90.00%

Contribution Amount

$100,000

Less: Federal Tax Shield on Contribution

($39,600)

Less: State Income Tax Credit**

($90,000)

Plus: Federal Shield Forgone Due to State-level Credit

$35,640

After-tax Cost of Contribution

$6,040

After-tax Cost per Dollar

$0.06

* Assumes two year commitment is made to EITC or OSTC, and 90% credit is obtained.

** Assumes donor has a sufficient level of PA taxable income to use all credits.

What business entities and taxes are eligible for the tax credits?

Business entities authorized to do business in Pennsylvania, including flow-through entities which are not subject to corporate income taxes, may apply for approval to make EITC and/or OSTC gifts.

What is the difference between the EITC program and the OSTC program?

The EITC program provides tuition assistance support to qualified students from lower income households. The OSTC program is slightly more restrictive, in that the students must also live in school districts ranked in the bottom 15% in Pennsylvania. The tax benefits of these programs are exactly the same.

Applications for returning business entities are accepted online beginning May 15. Applications from business entities new to these programs are accepted online beginning July 1. Please note that applications are accepted on a "first come, first serve" basis, and EITC in particular runs out of funds quickly, so it is important for new businesses to submit on July 1.